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PESHAWAR: The Auditor General of Pakistan (AGP) has detected losses to the tone of over Rs 2.445 billion in Mines & Mineral Development Department of Khyber Pakhtunkhwa during financial year 2018-19 and has directed recovery, said the Audit Report 2019-20 on the accounts of KP Departments.

The Audit Report has been presented in the provincial assembly wherein the Speaker has referred it to the Public Accounts Committee (PAC) of the house.

The highest loss to the tone of Rs.1525.183 million was occurred due to illegal mining in block A, B, C & D in Gawari Haripur. During audit of the Assistant Director Mineral Development, Abbottabad for the financial year 2017-18, it was observed that minor mineral leases were granted to various persons.

However, the former lessee of Block-A & B M/S Jamshid Ali son of Khan Pervez, resident of district Nowshera was provided an opportunity of illegal mining in mineral blocks A, B, C & D, resulting in a loss of Rs.1525.183 million approximately.

Audit has attributed the lapse to weak internal controls and when pointed out in October 2018, the management stated that detailed reply will be submitted after consulting the relevant record. The management was requested for arranging of Departmental Audit Committee (DAC) meeting twice. However, no DAC meeting was convened till finalization of the audit report.

Audit has recommended recovery, besides investigating the matter to fix responsibility against the person (s) at fault.

In second a loss of Rs.427.321 million has been occurred due to non-recovery of royalty from the work contractors of small dams.

According to the summary approved by the KP Chief Minister dully circulated by the Section Officer concerned and Chief Minister Secretariat, the chief minister directed the Irrigation Department to pay the estimated cost of Minor Minerals to the Mineral Department through contractors, since all mineral belongs to the provincial government as per provision of Section 49 of the Land Revenue Act 1967.

During audit of the Director General Mines & Mineral Khyber Pakhtunkhwa Peshawar for the financial year 2017-18, it was observed that in Khyber Pakhtunkhwa 10 small dams have been constructed by Irrigation Department. The work contractors of these small dams illegally excavated the minor mineral and were utilized in the construction of the said dams.

The Mineral Department carried out an assessment of illegal mining for recovery against the contractors of dams. The matter was moved on a summary to the chief minister KP, for approval and the same was approved for recovery against the dams’ contractors as per the assessment report of the Mineral Department. But, neither the assessed amount was recovered/deposited in government treasury nor was the same waived off to any contractor. Hence, the orders of the Chief Minister were set aside and the amount was not recovered till date of audit.

The lapse occurred due to weak internal controls and non-adherence to the rules and directives of the chief minister KP. When pointed out in June 2019, the department stated that detailed reply will be furnished after consultation with the concerned section.

Audit requested the department for holding DAC meeting twice. However, no DAC meeting was convened till finalization of the report. So, the audit has recommended recovery of all outstanding dues from the lease holders.

In third case a loss of Rs.266.175 million to the public exchequer was occurred due to less deposit of royalty collected departmentally.

According to Accounting Policies and Procedure Manual (APPM) all monies received as revenue of the government, must be banked in the name of the government without delay and included in the Consolidated Fund of the respective federal or provincial government.

During audit of the Director General Mines & Mineral Khyber Pakhtunkhwa for the financial year 2017-18, it was observed that royalty collection of Kohat Division (Kohat and Karak districts) was done departmentally ad a sum of Rs.57,300,000/- was collected on account of royalty. Comparison of the production report of Kohat Division i.e. Kohat and Karak districts, shown extraction/mining of various minerals, against which a sum of Rs.323,745,980/- was recoverable as royalty as production report.

Thus a sum of Rs.266,175/ (323,745,980-57,300,000) was departmentally less collected, on account of royalty collected against the actual production of minerals.

The less deposit of royalty against the actual extraction of mines is a serious lapse on part of the administration and shows the negligence of the Head Quarter Office, for taking no action against the Regional Office Kohat.

When pointed out in June 2019, the department stated that detailed reply will be furnished after consultation with the concerned section.

Audit requested the department for holding DAC meeting. However, no DAC meeting was convened till finalization of this report. Hence, the audit recommended recovery of all outstanding dues from the lease holders.

In fourth case, a loss of Rs.88.012 million has been occurred on account of under-reporting/concealment of mineral production.

According to Mineral Sector Governance Act 2017, if it is discovered that the holder of a mineral title has under-reported mineral production, the licensing authority shall charge royalty up to 10 times the notified rate, on the quantity of mineral under-reported, forfeit the security deposit and performance guarantee and may also cancel the mineral title on the merits of the case; provided that no action under this section shall be taken without giving an opportunity of hearing to the holder of mineral title; and an entry in the record of the holder of the mineral title shall be made regarding under-reporting.

During audit of the Project ‘Assessment Study & Establishment of Mines Monitoring & Surveillance Units in mineral-bearing areas of KP’ for the financial year 2017-18, it was observed that the mentioned leaseholders were involved in massive under-reporting of mineral production, causing concealment and evasion of royalty of the government.

Assessment of under-reporting of mineral production was carried out by the monitoring team of the project and reported to the government (Mineral Development Department KP) for recovery of the royalty. However, no action has been taken in these cases to recover assessed royalty concealed/evaded. A number of cases that have been reported by the monitoring team of the project and to date no action had taken by the government till date of audit.

The lapse has occurred due to non-adherence to the Mineral Governance Act, 2017 and when pointed out, the department sated that detailed reply will be furnished after consultation with the concerned section. Despite repeated requests of for holding DAC meeting, it was never convened. Hence, the audit has recommended the recovery of all outstanding due from the lease holders.

Similarly, losses to the tone of Rs.66.069 million and Rs.50.204 million were also occurred due to non-recovery of royalty, annual rent and fine and willful delay in processing and awarding of royalty collection contract of Hazara division. Audit has recommended recovery in both cases.

Copyright Business Recorder, 2022

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